While The Wealth-X and Arton Capital Philanthropy Report 2015 (see “The Rich Are Different” in this issue) examines the demographics and habits of ultra high net worth donors, another recent report on the demographics and habits of bequest donors in the U.K. may be of interest to gift planners in the U.S.
The new study by Smee & Ford, entitled Legacy Trends: Discovery Potential Through Data, is based on a study of more than 36,000 wills in which the decedent actually included a charitable provision. This study relies on actual documented bequests received rather than surveys of donors and summaries of characteristics of those who have indicated they have provided for a bequest—surveys that can sometimes simply measure intentions at some point in life rather than actual behavior.
After a flat period between 2007 and 2012, charitable bequests in the U.K. have been increasing since 2013. The report also revealed the importance of residual bequests that provided the majority of bequest revenue each year. Note that such bequests are not easily quantifiable as the amount changes over time due to investment market fluctuation and the amount spent for personal needs over the remainder of the donor’s lifetime.
Meet Dorothy and Dennis
The report introduces “Dorothy and Dennis Donor,” the composites of typical charitable bequest donors in the United Kingdom. “Dorothy Donor,” the person most likely to leave a charitable legacy, is:
- A woman
- Age 76 when she writes her will
- Age 83 when she dies
- Likely to include 3 charitable bequests in her will
According to the study, some 60 percent of U.K. charitable bequest donors are women. The other 40 percent are “Dennis Donors” and fit a similar profile as the women as far as age at death in relation to age at time of final will, etc.
Regardless of gender, charitable bequest donors tend to be older when they draft the will that leaves funds to charity. For example, more charitable wills in the study were drafted by people age 90 than age 65. The vast majority of charitable wills were drafted by people between 65 and 95. On average, bequest donors passed away 6.8 years after writing their wills.
A deeper examination of the data reveals that the single most common time to write a will that leaves a charitable bequest is just one month before death. About one in six bequest donors die within a year of completing the will, and 50 percent die within five years of signing the will. The death rate of the charitable bequest donors peaks between ages 80 and 95. While the last will may continue earlier plans, other studies in the U.S. indicate that in as many as half the cases, the will immediately preceding the final will had no charitable dispositions. [See “What’s Wrong With Focusing on Bequest Intentions From 40-Year-Olds?” in December 2013 Give & Take.] This study indicates that many charities are being included in the last will for the first time.
Bequests in the U.S.
Even though there are a number of differences in charitable bequest behaviors between donors in the U.S. and the U.K.—because of the legal, tax and cultural disparities—there are also many similarities that make this study of interest to nonprofits in the United States.
Sharpe Group has maintained information on estate gifts received by its clients for more than 50 years and this data is used by Sharpe consultants to help clients pinpoint the most likely sources for bequests. The U.K. findings echo the information included in Sharpe training seminars for decades.
This is one area, though, where “one size” does not fit all. Sharpe has found that the profile of a typical bequest donor, while similar to the U.K. findings overall, is very different depending on the size and scope of an organization, its mission, the demographic makeup of its donors and many other factors. One difference based on Sharpe data is that Americans tend to include a larger number of charities, in the range of 5 to 7, than the U.K. study would indicate.
If you are unsure whether your bequest or planned giving efforts are on track or could benefit from a fact-based Sharpe perspective with guidance unique to your organization’s needs, feel free to contact us by clicking here. ■